New ACG Chicago Initiative Puts Access to Capital Front and Center
ACG Chicago is giving minority-owned businesses a leg up with fresh funding from a $2.5 million government grant.
The number of U.S. minority-owned businesses is increasing rapidly—but without access to capital, they’re unlikely to reach their full growth potential.
The Minority Business Development Agency, part of the U.S. Department of Commerce, recognized the challenge, and in November it announced ACG Chicago as the winner of a grant to fund a Capital Center that will facilitate access to capital for minority-owned businesses. Although based in Chicago, the center is national in scope, and currently the only one of its kind.
The $2.5 million grant award will support the center over five years as it works hand in hand with roughly 40 MBDA Business Centers, which source contracts and growth opportunities for an existing base of minority-backed enterprises, or MBEs. Once they’ve won new business, MBEs often need financing to prepare—expanding their inventory or adding new machinery, for example.
The $2.5 million grant award will support the center over five years as it works hand in hand with roughly 40 MBDA Business Centers, which source contracts and growth opportunities for an existing base of minority-backed enterprises, or MBEs.
ACG Chicago entered the MBDA’s Capital Project competition last June with the goal of helping MBEs tap into its network, and to introduce a new source of deal flow for ACG members. “We’re trying to expand the opportunities for everybody, both the minority businesses as well as our member base,” said Craig Miller, ACG Chicago’s CEO.
The number of minority-owned firms in the United States increased by 38 percent from 2007 to 2012, according to the U.S. Census Bureau’s 2012 Survey of Business Owners. Many of these companies fall within the middle market, where ACG members typically focus.
John Weber, the Capital Center’s Executive Director and a former ACG Chicago board member, noted the center will not provide loans directly—rather, it will serve as a “matchmaker,” pairing businesses with capital providers. ACG Chicago will administer the center and tap into its network of bankers, advisers and investors, as well as forge alliances with other groups. The center plans to grow its staff to four to five in the coming months, said Weber, who spent 33 years as a commercial banker.
The initiative aligns with ACG’s mission of fostering corporate growth, said Venita Fields, president of ACG Chicago’s board of directors and a partner with investment firm Pelham S2K Managers LLC. “It seems like it would be a fitting thing for us to do to serve as a connection between the minority business community and capital providers,” she said.
The grant award requires the center to meet goals tied to financing, job creation and retention, and the number of companies served. In its first year, the center plans to facilitate $200 million in capital funding; its goal for the five-year period is more than $1.5 billion.
“We’re trying to expand the opportunities for everybody, both the minority businesses as well as our member base.”
Craig Miller, CEO of ACG Chicago
Miller expects businesses will learn about the center through its staff of business development professionals, word of mouth and referrals from existing networks like the MBDA, the Hispanic Chamber of Commerce, the Black Caucus, the National Minority Supplier Development Council and ACG. The Capital Center will host a series of webinars, or “Capital Calls,” which will review financing opportunities in the pipeline. It plans to host the calls quarterly, at minimum.
In addition to matching businesses with capital, the center will also play a role preparing companies that may be seeking financing for the first time, or recommend advisers to help.
“The company may think that it’s ready to approach the market for capital, however it may not have all of the answers and information that investors are looking for, so we want make sure it doesn’t do it prematurely,” Weber said. “We want to make sure we get the right partner in the right place at the right time for these businesses.”
ACG Chicago will formally launch the center at its annual Market Trends breakfast meeting on March 3. During last year’s event, the chapter and the MBDA signed a memorandum of understanding to formalize plans to work together.
Kathryn Mulligan is a former MMG editor who writes periodically for Middle Market Growth magazine and middlemarketgrowth.org.
